Abitibi spin offs power.

• Author: Stewart, Nick
• Position: NEWS

With eight hydro-electric dams connected to their paper mill assets in Kenora, Fort Frances and Iroquois Falls, Abitibi Consolidated Inc.'s July announcement to spin off its hydro-electric assets into an income fund has since caught the ear of a number of people across the North, from union members to community leaders.

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As more people lend their voice to the chorus, Abitibi is quick to point out that it would be a majority shareholder in the fund, which is expected to clear regulatory hurdles by the end of this fall. The company's intentions are not to cannibalize its current economic generators, but rather to enhance them, according to a spokesman.

"Our main objective for the company is to get back to profitability," says Denis Leclerc, director of public affairs. "One way to do that is to create this fund, which will serve as a growth vehicle for energy generation."

In order to accomplish this, Leclerc says that Abitibi is looking to the proposed income fund in order to obtain sufficient capital to move forward with plans to invest in various projects, including the improvement of their existing mills as well as various undefined energy generation projects.

"We have a lot on the table," says Leclerc. "Each site and each mill is always trying to find ways to be more competitive or productive, so each one has projects. This hydro fund, as soon as it is created, will be looking to such projects to increase generation."

Abitibi has no plans to divest itself of any hydro-electric assets or generated power, Leclerc says, adding there is no desire to commit any actions that would jeopardize the viability of the mills, which are not energy self-sufficient and require all the energy Abitibi can provide. More importantly, he says, 81 per cent of the company's annual revenue stems from the paper industry.

Leclerc says despite rumors to the contrary, the new income trust will not be devising new agreements to sell power to the paper mills to which they were previously connected, and that current arrangements will remain in place.

"Those power generation facilities will continue to provide power to our paper mills as-is," he says.

However, representatives from the Communications, Energy and Paperworkers Union of Canada (CEP) say this isn't their understanding of the situation.

"They told us that there is an impact on the mill's operating costs, but they claim that it's...